Avoiding Project Creep

To stay within the parameters of a budget, school districts must follow a set process.

School district capital projects generally begin with a preconceived concept and a financial limit. However, projects often are completed at costs that exceed 20 to 30 percent of planned costs. To stay within the parameters of a budget, school districts must follow a set process.

The first step is to examine how a typical capital project is initiated. Although there are no national standards for school capital projects, they all have similarities, including:

-The board directs the superintendent to implement a capital project action plan. -The superintendent meets with other administrators and develops an action plan. -The district writes a request for proposal (RFP) and solicits bids from interested architectural firms. The RFPs are reviewed and a recommendation for an architect is made. -Upon approval, the district's legal counsel develops a contract with the architectural firm.

Then, the panic stage begins. The superintendent and administrators examine the state education department's planning document and often find it incomprehensible. When it is determined that help is needed, most administrators turn to the architect for assistance.

The architect then maneuvers the district through various stages of the planning process. Upon approval by the Department of Education, construction contracts are bid and awarded.

Disadvantages of the process

Most architects are willing to do a feasibility study and develop the project's educational specifications. However, during these stages, as the architect meets with various groups and organizations, the cost begins to escalate.

The process of gaining input tends to coalesce people around special interests that may be at odds with budgetary goals. Districts need to keep in mind that the architect is paid according to a fixed percentage of the total project cost, which means there is no incentive to keep the project cost within the limits set. In the process of satiating various groups, the scope of the project is slowly expanded. When given a choice of good, better or best, people generally choose best even though good often will meet the requirements. This is where most districts lose the battle to maintain budgetary restraint.

Looking at alternatives

The Pennsylvania State System of Higher Education (SSHE) follows a different model. Although it follows a planning sequence that is compatible with the process used in most states, it differs significantly in its ability to control runaway cost. The steps are as follows:

-First, the board approves a project and charges the superintendent with the responsibility for implementation. -The superintendent meets with administrators and evaluates the project requirements. -A request for proposal (RFP) for a construction management (CM) firm is written and bids are solicited. -CM firms are interviewed and a selection is made.

Normally, the next step is for the solicitor to develop an architectural contract. However, this model initially bypasses the use of an architect to develop the feasibility study and the educational specifications. Instead, it uses a standard form of agreement for CM services, using a CM firm, which has no vested interest in the magnitude of the total project cost.

The CM firm, with input from the administration, completes the educational specifications and presents its document to the board and the Department of Education. Upon approval, the district develops a RFP to contract with an architectural firm. Upon receipt, the RFPs are reviewed and a recommendation for hire is made. The architectural firm is retained with the stipulation that it must design within the parameters of the educational specifications, not exceeding the established construction costs. These provisions are incorporated into a standard form of agreement for architectural services.

A significant difference between the typical process and the SSHE model is that the SSHE model uses four design phases, whereas many states use three or less design phases.

One advantage of the SSHE process is that it places the control for capital project spending with the school district. A CM firm provides realistic cost limits. Once a functional dollar amount is established, contracts are negotiated that require the architect to design within a given percentage of the total cost estimate established.

Finding ways to save

Every action taken during the design phase has an associated cost. While each factor, by itself, may seem insignificant, taken as a whole they represent appreciable savings. Consider the following to save money on construction projects:

-Standard agreements. Utilize standard construction, architectural and construction management agreements. In Pennsylvania, each school district employs different lawyers to draft legal contracts between the various organizations involved in a capital project. Statewide standard agreement documents could save school districts hundreds of thousands of dollars by not redoing what already has been done by another district.

-Set limits on the architect's reimbursable expenses. Negotiate all architectural expenses upfront. Recognize that most architectural firms will negotiate fees and expenses. Do not allow mark-up on reimbursable expenses, such as environmental study, mileage, copying, etc.

-Ensure district representation during the construction process. In-house inspection is needed to verify that the criterion written in the construction contract is being met. Generally, there are three systems used to assure quality construction: in-house staff, the contracted services of a clerk of the works, or an owner representative such as a CM firm.

In many instances, the best choice is a clerks of the works. Typically clerks of the works are not district employees. The position requires an individual who is a highly skilled technician and who is familiar with industry construction practices.

-Implement proactive value engineering. Construction that is costly but unnecessary often creeps into the design. Over engineering that exceeds industry standards is expensive. A CM firm contracted to oversee and monitor the architect's progress protects the district's interest. For approximately 2 percent of the total project cost, a CM firm can save a district at least 10 percent of the total construction cost through value engineering, constructability review and independent construction cost estimating.

-Seek independent cost estimates throughout all design phases. Implement the four phases of SSHE design management: the schematic design, the preliminary design, the pre-final design and the final design. To ensure that the architect is on target with the construction budget, independent cost estimates developed at each design phase provide a check-and-balance system.

-Conduct a constructability review. Every project has the potential for hidden cost, with the most common source being change orders. Change orders are initiated by the contractor, the owner or the architect when there is a departure from what is depicted on the plans or specifications.

An essential step in reducing change orders is a rigorous constructability review during the design phases. The constructability process is an examination of the construction documents by the CM firm. The team studies the architect's design and troubleshoots design conflicts and inconsistencies that otherwise would not appear until construction started.

Another method for reducing change orders is the implementation of an interdisciplinary quality control process. During the final stage of planning, an outside firm proofreads a set of construction documents, looking for errors, inconsistencies and omissions between the differing design disciplines.

-Develop a district architectural and engineering instruction manual. Every project should have detailed written design criteria. The criteria for what a district will accept in each of the four design phases are defined in a manual. This means the architect's application for payment is directly related to the completion of pre-established benchmarks and specifications.

-Follow the state's adopted general services architectural fee schedule. Many states maintain a fee schedule for the payment of services. In essence, the state establishes a fee schedule stipulating that the greater the project cost, the less percentage paid for design services. Without a state-adopted fee schedule, school districts have no standards for cost comparison.

-Separate telecommunications contracts from electrical contracts. In accordance with the Federal Communications Commission (FCC) Universal Service Program (e-rate), school districts can apply for discounts between 20 and 90 percent of the cost incurred for internal telecommunication connections, such as wiring, routers, switches and network servers.

-Duplicate construction documents in-house. School districts can reproduce the voluminous documents at a reduced cost. Many architectural firms charge 12 to 25 cents per page for each document and $4 to $6 per page of reproducible blueprints. There are thousands of dollars spent on a process that should cost only hundreds.

Recognize that until a contract is fully executed between the district and the architect, everything is negotiable. To accept architectural documents or cost estimates at face value places a district at a disadvantage and results in a loss of control. 

TAGS: Construction
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